\section{Insurer Operating Results}
\label{sec:InsurerOperatingResults}
	
Insurer's loss ratios are important because they determine whether insurers make generous profits, modest profits, break even, lose money, or become insolvent (bankrupt). We can break each dollar of insurer's premiums into ratios of specific costs per dollar of premium. We will assume that the ratio of the largest cost, losses, is on average, equal to the population loss ratio (PLR), 0.7500. All insurers incur non-loss ``operating expenses'' of \$0.15 per dollar of premium, assessing ``profit provisions'' and ``risk premiums'' of \$0.05 per dollar of premium for their insurance services. 
	
All insurers have \$0.85 per dollar of premium to pay policyholder benefits, without incurring net operating losses. The risk premium, a hedge against higher than average losses, protects the insurer's profit provision. As a last resort, insurers can tap their profit provisions, using these funds to pay benefits and still avoid net operating losses. Beyond PLREs of 0.8500, insurers require other funds to cover their obligations or they become insolvent.
	
Insurers earn profits of at least 10\% (\$0.10 per dollar of premium) when their PLREs are no higher than 0.7500. They earn profits of at least 5\% (\$0.05 per dollar of premium) when their PLREs are no higher than 0.8000. They break even when their PLREs equal 0.8500 and they incur losses when their PLREs exceed 0.8500. Insurer's losses will be higher than 5\% when their PLREs exceed 0.9000 and we assume that they will incur substantial, solvency threatening, losses (10\% or more), when their PLREs exceed 0.9500.
